Green Fields: Value of ethanol credit put at 18 cents a bushel

Des Moines Register
3:17 PM, Jul. 2, 2011
Written by: DAN PILLER

A University of Missouri analysis of the impact of the 45-cent-per-gallon tax credit for ethanol, now the subject of intense discussion in Congress, is that it raises corn prices by about 18 cents per bushel.

Such conclusions are in line with an Iowa State University study last year showing that if the 45-cent tax credit were dropped, corn prices would fall by about 10 percent.

Corn prices have doubled to more than $7 per bushel since last June in part because of heavy demand from ethanol producers. But much of the demand stems not from the tax credit but from the federal Renewable Fuels Standard, which this year will require use of almost 14 billion gallons of renewable fuels. That mandate will rise to as much as 36 million gallons by 2025.

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